Thursday, 31 March 2011

The Budget

The big political event last week was the Budget and parliament will continue to debate George Osborne’s proposals for most of this week. It is a difficult time to be Chancellor of the Exchequer. Times are hard but there is a huge black hole in the country’s finances and last year, the previous government made a loss of £150 billion. Turning those losses around while also doing the best he possibly can to ease the burden on hard pressed families was the balancing act the George Osborne faced.

The decision to reduce fuel tax and to fund a significant cut in South West Water bills were the two big announcements as far as Cornwall is concerned and were a good example of the extra clout that Cornwall now has within the new coalition government.

I have always disagreed with rises in fuel duty because I think it is a regressive tax which hits rural areas and peninsulas like Cornwall hardest of all. Our businesses have to transport their goods hundreds of miles up the road and there is no escaping higher fuel costs as a result. Fuel Duty was first introduced in the 1950’s as a temporary tax to fund the Suez War but they never took it back off and, today, it represents around 80 percent of the cost of the fuel we put in our cars. The decision to reverse the trend and start cutting taxes was welcome and the commitment to develop a policy to give a fuel tax rebate to rural areas like Cornwall was a very positive step forward.

The second important development was the commitment to end the injustice of unacceptably high water bills in Cornwall. Many household bills in Cornwall are currently double the national average as a result of the cost of maintaining our coastline. Politicians have talked about the problem for years but I have always felt we needed to move on from talking about the problem and start talking about a solution. Earlier this year I managed to persuade the DEFRA Select Committee to support my proposal of a Fair Discount Scheme which would mean targeted support to those with the greatest affordability problem but with the size of the discount heavily loaded towards those areas like Cornwall with the highest bills in absolute terms.

Although the government is still working on the details of how such a scheme would work, the biggest hurdle has been cleared and the significance of George Osborne including a commitment in his budget should not be underestimated. In all my discussions with ministers in recent months, concerns from the Treasury at how such a plan would work in practice always seemed the main stumbling block but they seem to have been persuaded to overcome those obstacles and take action to deal with this long running unfairness.

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